The US Budget Deficit & Gold
plus
Gold, Silver and the US Dollar
Review and Weekly Outlook

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Originally Posted on 10/16/2016 @3:52pm

by Steven Warrenfeltz

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A lot of Americans hear about the High Budget Deficit and how it will erode our economy and everything we hold dear. 

However, few know the antidote that an individual can own to help protect themselves from the rising deficit and its eroding effects on our lives.

First, one of the biggest misinterpretations that I find that people make is that they mix the terms deficits and debt together.

So what's the difference between a Deficit and Debt? 

A deficit happens when an entity or government spends more than it collects in a particular period, and Debt is the total sum of the accumulated deficits.

Why is the Deficit Going to Get Bigger?

For the last year or two, I've posted on the homepage, news articles from a blog called 'Econimica' (the blog was originally named 'Hambones Stuff').

I have no affiliation with the site, nor did I contact the author of the site before this post; I am simply pointing it out to you because the author has been writing (repeatedly) about critical subjects that go to the heart of a rising deficit question.

The subjects being: the Aging Population and Population growth and decline, and how it will ultimately affect the U.S. and Global economy and our lives, with higher deficits and debt.

Government overspending is what causes deficits and debt, but if you don't have a productive economy with more young workers than old, you won't be able to combat the problem, and it will continually get worse.

The author of Econimica doesn't always point out to you that our failing population demographics will lead to higher deficits, but it's staring you in the face as you read it.

It would be a disservice to you if I wrote at length about these issues because of the time and effort that Econimica’s author has put into these articles. Here are a few of the articles from Econimica that will help you understand this issue better:

Here are just a few of the articles from Econimica that will help you understand this issue better:

Econimica - The Myth That America's Superior Demographics Can Save It (web archive page - edit)

Econimica - US Popualtion Growth & Fed Funds Rates Correlated...Until Now!?! (web archive page - edit)

Furthermore, here are the Federal Reserve's numbers on the issue:

FRED Blog - Mapping the young and the old

If you want to understand this issue, I would suggest that you may want visit Econimica, because it covers the demographics issue better than any other site I've found. (Edit: Econimica is no longer online)

The Antidote for the
Individual against Higher Deficits

The problem isn't going to improve anytime soon. Gold and other precious metals are some of the few options that can help individuals when these problems really start to get out of control.

A good chart about this was recently tweeted by Tom McClellan of McClellan Financial below:

.@jessefelder Federal deficit is better explainer of gold price movements than those factors. If you think deficit going higher, own gold. pic.twitter.com/M1r71Gc2KG

— Tom McClellan (@McClellanOsc) October 12, 2016

GOLD

Last week, gold didn't move significantly; it mostly traded sideways and consolidated after taking a big fall in price the week before.

In the immediate future, gold's MACD and RSI are treading in oversold territory; the last time we saw gold this low in the MACD and RSI was in January, when it hit multi-year lows, so we should see gold’s price rise next week.

Furthermore, the red and black vertical lines on the right side of the gold price chart, below, indicate when the next Fed Meeting happens on Nov.2nd and the U.S. Elections on Nov. 8th, both events will give some future direction to the price of gold.   (continued...)

Charts provided courtesy of TradingView.com

Gold's Price Resistance and
Support Levels

Gold's Resistance Level

$1300.00

$1290.00

$1270.00

Gold's Support Levels

$1250.00

$1225.00

SILVER

In last week's post, seen here, I posted this silver chart, which shows the price of silver breaking below a bullish Falling Wedge and a bullish Ascending Channel. 

Given that both of these patterns were positive patterns and the price actions were not expected, it indicates a negative future for the price of silver.  (continued...)

Charts provided courtesy of TradingView.com

This week, I found a new rising trend line that is positive for silver’s price.

A trend line is a visual representation where two or more points connect to make a line, in any time frame.  On the chart below, I show you where the support levels are for this new rising trend line.

Also, silver's MACD and RSI are bottoming.  Silver's RSI hasn't been this low since January (indicated on the chart, below), and its MACD hasn't been at this level since before its multi-year low in January, so we should see some reversal this week.           (continued...)

Charts provided courtesy of TradingView.com

Silver's Price Resistance and
Support Levels

Silver's Resistance Level

$18.50

$18.00

$17.75

Silver's Support Level

$17.25

$17.05

$16.90

US DOLLAR

Last week, the U.S. Dollar broke above the falling trend line indicated in the chart below.

This week, the U.S. Dollar price in the chart below kept moving above its falling trend-line, and it is currently sitting just below the $98.25 resistance level.

This is a positive for the U.S. Dollar; however, the dollar's MACD and RSI are both topping out in overbought territory, so next week the U.S. Dollar should move lower.  (continued...)

Charts provided courtesy of TradingView.com

U.S. Dollar's Price Resistance and Support Levels

U.S. Dollar's Resistance Level

$99.00

$98.50

$98.25

U.S. Dollar's Support Level

$97.50

$96.90

$96.50

To see all prior Bullion Market Analysis Blog posts.

Go to this Guide's Blog page here, or see our Archive page on Tumblr.

Thank You for Your Time!

Take Care & God Bless.

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